Dutch insurer NN Group’s asset management arm will be purchased by Goldman Sachs in a deal worth about 1.7 billion euros ($1.98 billion), the bank said. This is the largest takeover by the United States based investment bank since 2018 when David Solomon became chief executive.

According to analysts, this deal is a part of the new strategy of Solomon to reduce the reliance of the bank on earnings from trading and advising on deals as sources of revenues. The new strategy of the Wall Street firm is to focus and expand into areas such as wealth management while also increasing its presence in markets outside of the United States.

“This acquisition allows us to accelerate our growth strategy and broaden our asset management platform,” Solomon said in a statement.

The completion of the deal will result in doubling of the total that Goldman Sachs manages in Europe at more than $600 billion as $335 billion in assets will be acquired by the Wall Street bank that are currently under the management of NNIP, or NN Investment Partners.

The Netherlands will become “a significant location” in its European business and the 900 employees of the NNIP will join it, Goldman said.

With Britain exiting the European Union, Netherlands has been chosen as their preferred European headquarters by many foreign financial firms and Goldman becomes the latest major financial company to expand operations in the Netherlands. NNIP is however based in The Hague, instead of Amsterdam which is considered as the main financial hub of the country.

According to the deal,  the biggest insurer of Netherland – NN Group, will also be leaving its $190 billion portfolio of insurance assets under NNIP management after the completion of the deal.

“The combined investment expertise and scale will enhance the service offering to NN Investment Partners’ clients, including NN Group,” said NN CEO David Knibbe.

The Solvency II ratio of NNIP will be improved by 17 percentage points, from 209% at the end of June with the sale, NN said, and added that the money generated from the sale will be used by it for acquisitions or as additional returns to its shareholders. The ratio is a measure of how much extra money it has to act as a cushion should markets fall.

“Given the company’s already strong capital position which is sufficient to fund its organic growth opportunities, and the lack of obvious M&A targets, the potential for significant excess capital returns in the coming year(s) is apparent,” said Credit Suisse in a comment on the deal. The price Goldman agreed to pay for the assets was higher than the 1.5 billion euros that it had expected, Credit Suisse said.

“While we saw potential here for a long-term growth partnership beyond management of existing assets … the seller’s priority was to maximise the immediate price tag,” said a DWS source close to the transaction.

(Adapted from CNBC.com)